When Did Things Stop Going Better With Coca Cola?

When Did Things Stop Going Better With Coca Cola? 

Indians are addicted to their sweet tooth, if the ‘diabetes capital of the world’ tag, is anything to go by. After all, a full 33% plus are afflicted.

This mithaifest doesn’t however seem to include our consumption of Coca Cola. It, the company, has claimed ‘inadequate demand’, speaking from its wholly-owned bottling company, Hindustan Coca Cola Beverages.  

Is this perhaps because Coca Cola isn’t sweet enough? Is it losing out to rival Pepsi, which uses a few spoon-fulls more in its formulation?

The Coke, that things apparently does go better with, at least among the rich and famous, is the infamously contraband ‘narco’ stuff, made famous by Colombia’s master-criminal Pablo Escobar.

But, is the black and sweet fizzy liquid, rumoured to have included a pinch of the narcotic in its original formula back in the day, reaching the end of the line?

Quintessentially American, Warren Buffet’s favourite drink still, at 85, accompaniment to globe encircling quantities of burgers, pizzas and fries; zillions of dollars worth; the mind boggles. 

Buffet says he still eats like a child, cokes, burgers, fries, ice cream, chocolates- and so much for the harm it does!

Despite this, have the health buffs in this country, plus our many native substitutes and variants, done in the Coke fizz with instant awareness?  

Even prime minister Narendra Modi recently advised soft drink makers to add some ‘real juice’ to their sodas - probably to help Indian fruit-growers. And some have already taken up the challenge.

Meanwhile, the government is considering imposing another, special, tax on sugar-sweetened soda beverages. The Rs. 14,000 crore aerated soft drinks industry, already attracts an excise duty of 18% . One more tax would probably break the camel’s back. So maybe the early passage of GST, if it happens, will come to Coca Cola’s rescue as well.

Coca Cola and its franchisees, started off by owning 24 bottling plants each, spread across the country, and most, in water plus areas, are still going strong.

Demand growth though, is lagging, in rural areas in particular. And even in urban India, our inveterate chai and kafi walas tend to consume ‘cold-drinks’ only in the hot summer months.

Combined with a running battle with advocacy against the drink, green activists, environmentalists, water starved farmers anti the plants; the company must do more serious rethinks on its product strategies.

Like the tobacco companies, the soft drinks ones have had to branch out into healthier - waters, flavoured and straight, juices, snacks, other non-food and drink businesses. So, what next?

Weak demand, plus bad press on pollution and consuming too much groundwater, particularly in a country largely dependent on erratic rainfall, prone to droughts, is definitely taking its toll.

It has led to Coca Cola recently shuttering three more of its wholly-owned bottling plants, bringing the tally up to five, or almost 20% .

But the weak demand problem is not untrue either, because the activist/farmer opposition has been a constant, complaining steadily for well over a decade.

The plants that have just been shut down are in the desert state of  Rajasthan, Andhra Pradesh, and Meghalaya.  They could start up again though, if market forces brighten. Another two, in Kerala, and Varanasi, UP, closed down earlier.

But despite all this, according to 2012 figures, India is Coca Cola’s 6^th largest market worldwide. Considering it is sold everywhere, that is significant. It had plans to inject $5 billion more into the country by 2020, said the company in 2012. Now, it appears, this may not happen.

Meanwhile,Coca Cola blandly denies all environmental charges, terming its water needs as ‘miniscule’, and claiming it uses international best practices with regard to pollution.

Still, the gap in perception has not narrowed from either side, not over Coke’s nearly two decades on the ground.

The opposition to its plants has been fierce enough though for it to shelve plans for a facility in Tamil Nadu, Uttarakhand, and expanding one in Uttar Pradesh.

Precipitously falling ground water levels are indeed a big environmental issue generally, with increasing drawdowns of water for construction as cities expand, drinking, intensive farming, no recharge in concrete jungles, etc. This, in the absence of adequate rain and irrigation, and the ravages of El Nino.

But there are hard-boiled business dictates at play here too. Coca Cola’s oldest plants, quite logically, are the first ones going down. The one in Kaladera, near Jaipur, for example, is 16 years old.

The machinery is exhausted, and the wells have run dry-but only in these five. 

(752 words)

July 25th, 2016

Gautam Mukherjee